September's Lowdown

September 2010, Volume 12, Number 9

Edited by Jim Hightower and Phillip Frazer


In the past two years 55 percent of workers have lost a job or taken a cut

Corporate kings grab our tax subsidies but create no new jobs. Obama fiddles.

By gollies, when the economic going gets tough for America's workaday people, you can always count on our tough-minded political leaders to get going! Get going, as in: rush like hell to find some gimmick to make it look like they're doing something without actually, you know, doing anything.

A golden classic of the gimmick game came from Gerald Ford. Remember Gerry? In 1973, this bland Republican House leader was chosen to be vice president when incumbent Spiro Agnew had to abdicate the office due to his untimely indictment on a mess of corruption charges. Ford then unexpectedly fell into the presidency itself in August of 1974 after Dick "I am not a crook" Nixon was forced to resign due to his own mess of corruption charges.

Those were interesting political times, made more so by an explosion of inflation sweeping the land. Prices on everything from food to gasoline were skyrocketing and people's incomes were being sucked down the economic drain. With national elections looming in 1976, Ford needed to do something. However, his hands were tightly tied (and his brain locked down) by Republican orthodoxy, which dictates that the proper role of government when consumers face a devastating crunch is... well, nothing.

Still, for appearances sake, Ford declared inflation to be "public enemy number one" and launched a national 'WIN' campaign--a dandy acronym for "Whip Inflation Now." It was meant to convince consumers that they (not corporate gougers) were to blame for rising prices and that they should simply spend less. The program distributed approximately a gazillion red and white WIN buttons across the land, urging people to wear them as a show of their personal patriotic commitment to Ford's blame-the-consumer crusade. As financial guru Alan Greenspan said at the time, "This is unbelievably stupid." Unsurprisingly, American voters limited Ford to one two-year term as an accidental president.

Look out, Obama

Few presidents have come into office on such a promising note as Barack Obama, and few have squandered the people's hope so quickly and needlessly. The cause of his decline is right in front of him and all of us: jobs.

America faces a historic, long-term jobs crisis that goes far deeper than monthly unemployment statistics. The great middle class itself is being decimated, creating a dangerous and widening income disparity that is shredding the very fabric of our national unity. Forget whether America will be a global leader--the question is whether it can even be a national leader, in the sense of holding a democratic society together. Due to an appalling failure of policy, we are fast tumbling down into oligarchy.

Obama has spoken often about the need to deal with the "challenge" of unemployment, but he shows no grasp of the severe economic, political, and social crisis that this new era of permanent joblessness poses to our nation and our sense of who we are. Yes, he made a good start in 2009 with a stimulus bill that succeeded in stemming the painful flow of another couple of million jobs that otherwise would've been lost. But then he quit, failing to build on that modest start by pressing for a much larger, long-term stimulus that would create the millions of new, middle-class jobs that America urgently needs.

He also refuses to acknowledge, much less confront and combat, the devastation being wrought by a relative few corporate CEOs and Wall Street financiers who, from the days of Reagan, have deliberately and ruthlessly used their autocratic corporate authority and their lobbying clout to alter our nation's economic fundamentals. Fundamental number one is that corporations are expected to create jobs--good jobs and lots of them. To sustain a middle class.

The corporate squeeze

Profits up!" gloat today's headlines in the business media. The New York Times reports that the profits of 175 of America's big- gest corporations have soared by a whopping 42 percent this year. The 500 largest corporations now have an all-time record trillion dollars in cash, but far from hiring, cor-porate chieftains are still firing: [read more]

Corporations are granted enormous legal and governmental privileges that the rest of us don't get, and their esteemed executives consider themselves worthy of taking grossly disproportionate shares of the company's income. In exchange for such privileges and pampering, the moral obligation of the corporation is, at a minimum, to provide good wages and ethical treatment for the larger society from which it benefits. This obligation is central to our nation's unifying principle of the common good--either we're all in this together... or not.

Today's moneyed elites have unilaterally made a choice: "not." Spouting an extremist laissez-faire ideology, they and their political enablers have monkey wrenched the system to separate their own good fortunes from the well-being of the rest of us--and from the well-being of America itself. This selfish break from our society's historic commitment to the common good is the source of today's and tomorrow's joblessness, and there will be no true fix until it is addressed. That is the job of a president.

I know that Obama is faced with a bunch of pallid, puffy, and pathetic old sourpuss senators in the Republican minority who have decided that they will, at all costs, kill even his meekest initiatives. But, come on--that's a fight he should welcome, a la Harry 'Give 'em hell' Truman. These obstinate nullifiers should make him angry, bolder, more determined, more FDRish, more willing to rally the people to do what America needs to have done!

Instead, he resorted to a Ford-like gimmick. Last December, Obama announced a 'Jobs Summit,' declaring: "We are going to be bringing together people from all across the country--business, labor, academics, not-for-profits, entrepreneurs, small and large businesses--to explore how we can jump-start the hiring." His aides said they hoped the high-profile gathering would demonstrate concern for the plight of everyday Americans.

Concern? The bottom is falling out of the middle class, and the presidential response is a one-day gab session guaranteed to go nowhere? It had nowhere to go because, while Obama told the 130 participants and the assembled media that he was open to "every demonstrably good idea" for creating jobs, he and his staff made absolutely clear before the meeting that he was not open to any sort of direct federal action on a New Deal scale that would actually cope with this rising national emergency. "Our resources are limited," he shrugged, conceding that he was putting Republican demands for short-term deficit containment above the crying need for good jobs.

Rep. Marcy Kaptur, an Ohio Democrat who is co-chair of the 'Jobs Now' caucus in the House, promptly hung the appropriate hypocrisy tag on that choice: "What's a bit ironic to me is that [Obama and his advisors] were able to figure out how to help the big banks without any summit, but now that they're talking about helping people, it is a year later and they need a summit."

The day after the dog-and-pony show at the White House, the Bureau of Labor Statistics announced that another 11,000 jobs had been lost.

The long depression

Yes, depression. Economists (drawing profound conclusions from intricate mathematical models and their careful study of chicken entrails) tell us that America has been in the Great Recession, but that it ended recently and recovery is underway. The majority of Americans, of course, don't have degrees in economics, mathematical models, or chickens, so they look at reality every day, which tells them there is no recovery and they are trapped in the vortex of a "long depression."

America has been here before. Following the financial panic of 1873, an economic contraction swept the country. Lasting two years more than the Great Depression of the 1930s, this decline became known as the 'Long Depression,' during which recoveries would rise sporadically, only to collapse back into depression. Gaping inequalities arose as the wages of workers were savaged and the livelihoods of small farmers and Main Street businesses were devastated, while vast fortunes were amassed by robber barons-- a disparity that spawned the populist and labor uprisings of the late 19th century.

Here we go again. While the barons of Wall Street were quickly rescued from the 2007 crash they caused and have happily returned to stuffing multimillion-dollar bonuses into their pockets, middle-class families are in free fall--losing jobs, businesses, income, health coverage, homes... and hope.

Officially, the unemployment rate is 9.5 percent--14.6 million people. Bad, but most politicos and pundits have decided that it's really a personal crisis for those few affected Americans, not a national emergency requiring lawmakers to attack it head-on.

Meanwhile, back to reality. The latest Pew poll finds that current job conditions are not merely a direct problem for a tenth of our people, but for more than half of us. In the past two years, 55 percent of those in the workforce have directly felt the pain of America's job squeeze, including:

  • 32% who have been out of work during this period.
  • 28% who've had their hours reduced.
  • 23% who've had to take pay cuts.
  • 11% who've been forced from full-time positions into part-time.

In fact, a contingent of job market economists asserts that official unemployment is grossly (and perhaps intentionally) undercounted. For example, TechnoMetrica Market Intelligence, a respected firm that does its own monthly household surveys, concludes that the real unemployment rate is over 22 percent. They note that 8.6 million college graduates are in low-skill, part-time jobs because the full-time jobs they were educated to take don't exist. Statisticians count them as employed, but they themselves do not. Instead, they identify with the millions of unemployed Americans, considering themselves to be "looking for a job" in a depressed economy that has no room for them--and no plans to make room.

INTERESTING TIDBIT: Austan Goolsbee, now on Obama's Council of Economic Advisors, wrote a 2003 New York Times piece documenting that the government has "cooked the books" by not counting entire groups of unemployed people who're out of work, thus holding the official unemployment rate artificially low. This year, when a reporter for Daily Finance inquired whether Goolsbee thinks this undercount continues, a White House spokeswoman responded that he would not be available to comment.

The new normal

Among the walking wounded in our economy are people generally hailed by the media and politicians as tremendous success stories: entrepreneurs. One smiley-faced report from a business foundation merrily asserts that 2009 should not be remembered for the massive job losses that jolted the middle class, but as "the year business start-ups reached their highest levels in 14 years." Amazingly, this surge in the number of self-employed entrepreneurs did not come from internet whiz kids, but from older folks, including a big jump in newly-minted entrepreneurs who are over 55.

But it turns out that another word for "entrepreneur" is "unemployed." Instead of being enterprising go- getters breaking free of the corporate cubicle, they've been booted out by top executives determined to replace their workforce permanently through offshoring, contracting, outsourcing, and automation.

Writing about this widespread dumping strategy, former US Labor Secretary Robert Reich tells about a dumpee he calls "George." Having lost his high-level position in a technology firm last year, George spent months in a fruitless job search. Finally, he was called back by his old firm--not as an employee, but as a self-employed contract worker. "Technically," Reich writes, "George is his own boss. But he's doing exactly what he did before for less money, and he gets no benefits.... Worse still, his income and hours are unpredictable even though his monthly bills arrive with frightening regularity."

Involuntary entrepreneurs like George don't make it into the unemployment stats, nor do they figure into Washington's job policy calculations. But they are another screaming symptom of an economy that's being badly and deliberately warped by the rich, for the rich. Ordinary working Americans, who have comprised the great middle class that has given our nation economic and political stability since the reform movements of New Deal days, are coming face to face with the new normal of planned insecurity: long periods of joblessness, low wages, the barest of benefits, and a tattered safety net.

Nearly half of those who are officially counted as out-of-work have been jobless for longer than half a year. That's 7.3 million people, the highest level of long-term unemployment since the government started keeping records 60 years ago. Almost half, 3.6 million, have been out of work for more than a year. Then there are the "99ers"--some 1.4 million desperate Americans who've exhausted the maximum 99 weeks of unemployment benefits anyone can get. Unable to find a job after nearly two years of searching, they now greet a harsh new world of zero income.

Long-term unemployment feeds on itself, because it affects re-employment. Half a year or more out of the workplace, your contacts fade and your confi- dence wilts, plus you've got an unappealing hole in your resume and you're that much older. A national "recovery" doesn't mean that you recover. When you finally do land a job, chances are it'll be worse than the one you lost. You fall into a permanent and growing pool of unemployed/barely-employed workers, wondering where your next dollar will come from, leaving you willing to settle for the minimum that corporations offer.

Well, scolds the entire chorus of the Church of Conventional Wisdom, that's your fault, isn't it, Bucko? You have to improve yourself--job training, that's your ticket to the future! Last month, Treasury Secretary Timothy Geithner offered training as Team Obama's cure-all for the millions of people mired in long-term joblessness: "We must do more to ensure that they have the skills they need to re-enter the 21st century economy."

Well swell, Tim, but as a job training expert with the Economic Policy Institute points out: "Training doesn't create jobs." There are five unemployed people for every job opening in our country today. Training won't put them to work.

New York Times reporter Peter Goodman wrote in July about a middle-class Brooklyn man who suddenly was thrown out of work. Unable to land another job, he enrolled in a program to upgrade his computer skills, hoping this would increase his job prospects. But still he could find only a few, low-wage openings, and mobs of desperate applicants were in line for those. "Training was fruitless," the frustrated man said. "I'm not seeing the benefits. Training for what? No one's hiring."

Millions are having this living nightmare. They are what Goodman calls the new poor: "people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives--potentially for years to come."

Washington fiddles, voters burn

Though the Powers That Be don't want it said out loud, we're witnessing what Robert Reich calls "the Great Decoupling" of the corporate and financial elites from the rest of us. As Reich candidly states, "The reality is this: big American companies may never rehire large numbers of workers."

Our national policymakers also have decoupled from this job crisis, even as it burns a hole right through the heart of America. They either don't get it, or don't care.

Perhaps they don't engage because it's not happening to them or to anyone in their social circles. Few in Congress, of either party, are middle class or have any inkling how precarious it is for people today trying to make it on $50,000 a year or less--which is in the income neighborhood where 75 percent of Americans dwell.

Another problem is that too many lawmakers and top economic officials simply accept the contrived wisdom of the moneyed elites, which conveniently instructs us that high unemployment is a new structural reality beyond anyone's control. Immutable free market forces, they explain, have permanently altered the landscape, including such changes as these:

  • Corporations today are mostly owned by global speculators and hedge fund operators who demand quick profits and big leaps annually in stock prices--unnatural feats that require dismissal of thousands of employees and routine downsizing of pay levels.
  • The decimation of unions, allowing CEOs to replace skilled, experienced workers with low-paid, part-time, temporary, contract workers who give no pushback to the whims of bosses.
  • Globalization, allowing corporations to offshore not only their manufacturing work, but also their high-tech design and development jobs, sales, service, accounting, legal, and other positions--easily getting cheap replacements in China, India, and elsewhere.

You can't fight progress, they say, ignoring the obvious fact that these changes are not progress. These destructive forces are rampaging through our society only because corporate and financial lobbyists conspired with Washington for the past 30 years to rig the rules to empower speculators, disempower unions, and subsidize globalization--nothing natural about it.

Where's Franklin Roosevelt? He had the stuff to get right in the face of the "economic royalists" and their congressional puppets, demanding and producing action. He fought for ordinary people, not offering them a jobs summit, but JOBS.

Obama's White House, which so obsequiously pulled out all the federal stops to rescue Wall Street banksters, has no stomach for a similar, all-out national effort to rescue an economic and social asset that is far more critical to America's well-being than a handful of big banks: the middle class.

The word is that Obama and the Democrats fear that a big jobs push would let Republicans tag them as "liberal" in this fall's elections. They should check out a July Reuters-Ipsos poll, in which 67 percent of Americans said the Obamacans are too focused on Wall Street and not doing enough on job creation. The people don't see Obama as too "liberal," but as too "little."



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